Yanukovych Sure on EU Pact as Ukraine Braces for Russia Backlash

By Halia Pavliva -
Sep 24, 2013

Ukrainian President Viktor Yanukovych said he’s confident his country will sign an accord
to cement ties with the European Union this year as Russia
threatens retaliation for snubbing its own customs union.

Ukraine plans to sign an Association Agreement and free-trade pact with the 28-member bloc at a summit in the Lithuanian
capital of Vilnius on Nov. 29, Yanukovych said in an interview
yesterday in New York. Russia has disrupted the passage of
Ukrainian goods across its border in recent weeks and has tied
requests from its neighbor for cheaper natural gas imports to
membership in the customs bloc it created with Belarus and
Kazakhstan.

“There’s a mutual understanding that there will be no
obstacles on the way to signing the agreement,” Yanukovych said
after meeting European Union President Herman Van Rompuy and
European Commission President Jose Barroso. “The main problem
in Ukraine’s relations with Russia has always been Russia’s use
of energy to pressure Ukraine.”

The EU deal would pull Ukraine further away from Russia’s
orbit 22 years after it declared independence following the
Soviet Union’s demise, directing it toward the path that brought
the three Baltic nations, also former Soviet republics, into the
world’s largest trading bloc in 2004.

“We are hearing these threats and even some humiliation by
the media outlets,” Yanukovych said. “That doesn’t help our
relations and that doesn’t paint Russia in a good way.”

‘No Sense’

While Ukraine is “convinced” it will sign the EU
agreement in November, it wants to find a way to develop a
relationship with the Russia-led customs union, Yanukovych said,
adding that it “makes no sense” for the bloc’s members to
reply to Ukraine’s EU agreement with a trade war.

“Our relations with the EU will benefit the customs
union,” Yanukovych said. “Ukraine is a bridge between Russia
and the EU and it’s very important to make sure the bridge is
strong and reliable. Dialog between Ukraine, Russia and the EU
on trade issues is possible in the near future.”

While EU enlargement head Stefan Fule said the bloc backs
Ukraine amid Russian pressure, to seal the pact the country must
address examples of selective justice such as ex-Premier Yulia Tymoshenko’s jail term.

A European Parliament commission led by ex-Polish President
Aleksander Kwasniewski and Pat Cox, the former head of the
legislature, is working on a solution to the issue of
Tymoshenko’s seven-year sentence for abuse of office while
serving as prime minister, according to Yanukovych.

‘Very Complicated’

There are no means of freeing her or allowing her to
receive treatment in Germany under existing Ukrainian law and
she’s awaiting decisions in other cases against her, Yanukovych
said.

“The Tymoshenko issue is very complicated,” he said. “It
would be less complicated if she’d attend court meetings, but
she’s refusing to do so.”

Separately, the Ukrainian leader said he’s optimistic the
government can reach an agreement this year with the
International Monetary Fund for a $14.3 billion bailout as the
economy struggles to recover from a recession. While the
Washington-based lender has sought an increase in household gas
tariffs to reduce budget subsidies, Yanukovych said that would
be “unacceptable” and he’s seeking different terms.

“We’ve been in talks with the IMF all these four years and
we expect the IMF will finally be willing to make an
agreement,” he said. “We’ve fulfilled all of the conditions,
except for one, which is an increase in gas prices for
households. There is no room for us to hike the price. On when
the agreement may be signed exactly -- this is a question to the
IMF. We’re willing to replace that condition with another and
are willing to discuss it.”

Exxon, Shell

The Ukrainian leader will meet executives from Exxon Mobil
Corp. (XOM) and Royal Dutch Shell Plc (RDSA) during his U.S. visit and plans
to sign agreements that will allow the companies to start
producing natural gas in Ukraine, he said. Exxon is seeking to
explore off Ukraine’s Black Sea shore, while Shell in January
signed a shale-gas production sharing agreement with the
government.

Ukraine wants to raise its gas production to 30 billion
cubic meters a year by 2017 from 21 billion cubic meters
currently, which would be enough to cover its domestic
consumption of the fuel, Yanukovych said.